FM Sitharaman paves way for PSU mergers, privatisation; opens all sector opportunities for private cos

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Updated: May 17, 2020 2:55 PM

FM Nirmala Sitharaman has allowed consolidation of the PSU companies into only strategic sectors.

PSUs to be privatised, strategic sectors, nirmala sitharaman, finance ministerNirmala Sitharaman said that limiting the number of PSUs in each sector would minimise wasteful administrative costs.

Finance Minister Nirmala Sitharaman has paved the way for opening up of all sectors to private companies, while allowing for consolidation of the PSU companies (public sector utilities) into only strategic sectors, to be notified. Further, each of such notified strategic areas will have a maximum of four PSUs, and the remaining state-run companies would be either merged or privatised. The move could trigger a series of mergers, and disinvestment, sale and privatisation of state-run companies in the coming months and years. Nirmala Sitharaman said that limiting the number of PSUs in each sector would minimise wasteful administrative costs. The government has taken this step to give India a coherent policy to accomplish the Atma Nirbhar Bharat mission, Nirmala Sitharaman said while announcing the fifth and last of measures under PM Narendra Modi’s special economic stimulus package.

The latest move by the Finance Ministry has opened a new window of opportunities for the private players as they will now be allowed to participate in all the sectors of the economy. The announcement on the public sector policy spells out the role of the government-owned companies within a broad framework of strategic sectors and it would help both the private sector and the state-owned firms as there is no conflict between the public and private sector, said Assocham Secretary general Deepak Sood. It is a move aimed at getting the best out of our national assets, whether they are in the public or private sector, he added.

Prior to this, in the fourth tranche of announcements, the government allowed the private sector to be a participant in the country’s space journey. To provide a level playing field for private companies in satellites, launches and space-based services, FM Sitharaman had allowed the private players to use ISRO’s facilities and assets. Private players were also allowed to be a part of planetary travel programmes.

Also Read: FM Nirmala Sitharaman’s big reforms push in mining, but no action on high levies

In a landmark decision to boost the private sector, commercial mining of coal and privatisation of discoms in the Union Territories were also included. Besides, six more airports are now ready for auction under the public-private-partnership (PPP) model and additional investments are likely to happen in 12 airports to create world-class infrastructure.

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Amid the coronavirus-led crisis, apart from giving more opportunities to the private sector to spur growth, the government has also relaxed many compliance requirements to make its operations easier. In today’s announcement, the FM decriminalised Companies Act violations involving minor technical and procedural defaults such as shortcomings in CSR reporting, inadequacies in board report, filing defaults, delay in holding AGM, etc.

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